Customer Centricity for Profitable
Growth
Dr. Kamel Jedidi
Professor of Marketing,
Graduate School of Business,
Columbia University, New York
Professor of Marketing, Graduate School of Business, Columbia University, New York
B
usiness world has
seen a lot of changes
during the last few
years due to many reasons.
Companies can grow and
progress using many
different strategies such as
mergers, innovations,
acquisitions and most
importantly, customer
centricity. Today, more and
more businesses are focusing
on the customer centricity
after realizing its massive
impact on their business as it
offers competitive advantage
and sustained and profitable
growth. However, customer
centricity is a very complex
and difficult strategy to
master as it presents myriads
of challenges to the
entrepreneurs.
What is Customer
Centricity?
Many people take customer
friendliness and customer
centricity as one and the
same thing but in fact, they
slightly differ from each
other. Customer friendliness
is a good strategy but most
often, it is not a very
sustainable one. There are
two aspects of inexhaustible
literature available about
customer centricity. One
aspect is the value creation
or customer friendliness and
other is the capturing this
value or treating customers
as an asset
Therefore, it can be rightly
said that one part of
customer centricity is indeed
customer friendliness or
creating a delightful
value or experience for
the customers. The
other part is value
capturing as
mentioned above. It
is just like loving your
customers and in
response, being loved
by them. This is actually a
win-win situation
because you
make your
customers happy and change
their lives. In response, they
keep coming back to you
allowing you to maintain
sustainable growth.
It is necessary for customer
centric firms to not only
understand what customer
values but also the value
customer represents to their
bottom line. For your
business to be successful,
you have to believe in
creating and then trying to
capture value back from right
customers. It is especially
important for
organizations
working in
very
competitive
markets
such as auto
insurance
industry to
care for the
interests of the customers if
they want to succeed. Such
markets are not very
profitable and only option
for them is to attract as
many
customers
as possible
by creating
some real
value for
them that
other
companies
are not
offering.
There are
many
companies
in this
industry,
most
important of which is
Progressive, which has
maintained a good balance
between value creation and
value capturing and thus are
making good profits.
How Much Value to
Create?
Creating value for customers
will definitely help any
organization to retain
existing customers and
attract new ones. However,
the company should also
determine how much value it
should create for the
customer. For example,
Hoover offered two free air
tickets to USA back in 1993
to anyone who would buy
their products at least worth
$5000. Obviously, it was a
very generous offer and
almost 200000 people took
advantage of this offer
resulting in $1 million loss for
the company.
Although, Hover created a lot
of value for the customers
but perhaps, they crossed
the limit while doing so and
this is really what makes
customer centricity a really
complex concept to
understand. The customer
centric companies have to
determine how much value
they have to create that
proves to be beneficial for
customers but does not
destroy the value for the
company itself in the long
run.
Creating the Customer
Advocate:
Creating custom
advocate is
another aspect
of the business
that most of the
companies
ignore. Again,
the process of
creating
customer
advocate starts
from creating
value for the
customers. If you
really want to
attract new customers and
retain existing ones, your
products or services should
offer them a good value or
provide long term solutions
to their problems. In other
words, you need to improve
your own performance while
catering to the needs of the
users.
Following is a Kano Chart
that represents the
relationship of your
company’s performance with
different types of customers
using your products or
services.
 Listening to the
Customers:
 Testing and Learning:
If you want to create some
real value for your customer
in a hope to recapture it in
the long run, you also have
to listen to what they are
saying or what they need.
Similarly, companies should
also pay attention to the
customers’ feedback and try
to improve their
performance and enhance
the standard of their
products or services
accordingly. No matter how
good your product is, it will
not create any value for the
customers if it is useless for
them. Companies which do
not pay heed to the demands
and feedbacks of their
Testing and learning is
another part of creating
customer advocate.
Companies need to
introduce intuit offers such
as adding a toll free number
for customers to call at any
time if they have any
problem, adding a new
feature that is equally helpful
to majority of the customers
and figuring out how they
can provide all these services
within the retail price of the
product. Secondly, it is
imperative for the
companies to make their
systems easy to use and
ensure that they provide
excellent customer services.
Companies need to consider
customers are very likely to
lose them and in turn, lose
much of their business.
customers as their true
assets and must not leave
any stone unturned to create
the lifetime value that
matters most to them.
 Observing:
Observing the market and
what competitors are doing
will also enable companies to
create the values that
customers love to capitalize
on. Similarly, companies also
need to make the value they
create acceptable to all the
customers that is; it should
be equally convenient for all
of them and should not
create problems for one or
two customers while
benefiting others.
Rewards for Customer
Centricity:
Customers are not doubt the
asset for any organization
and therefore, a customer
centric approach will help a
company to earn rich
rewards with the passage of
time. Following is an
illustration explaining how
much profit customers
generate for the company
over time.
Customer Centricity
versus Product Centricity:
There are a lot of differences
between customer centricity
and product centricity. While
the earlier is an approach
that does not care for the
interest of the customers,
product centricity is all about
looking after the interest of
the customers, creating
value for them and then
improving your profits by
recapturing that value in the
long run. Finally, there is not
denying of the fat that
customer centricity is a winwin strategy that benefits
both the company and
customers. Following figure
highlights some main
differences between product
and customer centricity.
This is the summary of the
webinar, “Customer
Centricity for Profitable
Growth” by Dr. Kamel Jadidi,
Professor of Marketing,
Graduate School of Business,
and Columbia University,
New York.
The Madinah Institute for Leadership and Entrepreneurship (MILE) brings
executive education to discover new dimensions in Leadership Development,
Leadership and Management practices to help them grow in their business
careers. MILE is a CSR initiative of Savola Group's CSR Programs and grew to
be a collaborative initiative aims to attract the contributions and support of
many other companies, academic institutions, research & consulting
organizations and professional groups.
Below is the link of MILE blog where you can find Dr. Kamel Jedidi’s webinar
video:
http://blog.mile.org/customer-centricity-for-profitable-growth/
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